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France, and the European “populist wave”, may be fixed for now, but geopolitical concerns remain as was made clear last night when during a phone call late on Sunday between Chinese President Xi Jinping and Donald Trump, the North Korean neighbor called for all sides to “exercise restraint” as Japan conducted exercises with a U.S. aircraft carrier strike group headed for Korean waters. China, which has repeatedly called for the de-nuclearization of the Korean peninsula, is “increasingly worried” the situation could spin out of control, leading to war and a chaotic collapse of North Korea, something we cautioned over two months ago.

Xi told Trump on the phone that China resolutely opposed any actions that ran counter to U.N. Security Council resolutions, the Chinese foreign ministry said quoted by Reuters. China “hopes that all relevant sides exercise restraint, and avoid doing anything to worsen the tense situation on the peninsula”, the ministry said in a statement, paraphrasing Xi. The nuclear issue could only be resolved quickly with all relevant countries pulling in the same direction, and China was willing to work with all parties, including the United States, to ensure peace, Xi said.

A potential risk catalyst is just hours away: North Korea prepares to celebrate the 85th anniversary of the foundation of its Korean People’s Army on Tuesday. It has marked similar events in the past with nuclear tests or missile launches.

That said, a Chinese foreign ministry spokesman said the call between the two presidents was the latest manifestation of their close communication, which was good for both of their countries and the world.

China urges calm as Trump holds calls on North Korea

On Sunday, Trump also spoke by telephone with Japanese Prime Minister Shinzo Abe, who later described the conversation as a “thorough exchange of views”.

“We agreed to strongly demand that North Korea, which is repeating its provocation, show restraint,” Abe told reporters. “We will maintain close contact with the United States, keep a high level of vigilance and respond firmly,” he said. Abe also said he and Trump agreed that China should play a large role in dealing with it.

According to Reuters, a Japanese official said the phone call between Trump and Abe was not prompted by any specific change in the situation. Envoys on the North Korean nuclear issue from the United States, South Korea and Japan are due to meet in Tokyo on Tuesday. The U.S. government has not specified where the carrier strike group is, but U.S. Vice President Mike Pence said on Saturday it would arrive “within days”.

Meanwhile, South Korean Defence Ministry spokesman Moon Sang-gyun gave no details about the South’s plan to join the approaching U.S. carrier group for exercises, apart from saying Seoul was holding discussions with the U.S. Navy. “I can say the South Korean and U.S. militaries are fully ready for North Korea’s nuclear test,” Moon said. South Korean and U.S. officials have feared for some time that North Korea could soon carry out its sixth nuclear test.

As reported on Friday, satellite imagery analyzed by 38 North, a Washington-based North Korea monitoring project, found some activity at North Korea’s Punggye-ri nuclear test site last week. However, the group said it was unclear whether the site was in a “tactical pause” before another test or was carrying out normal operations.

Adding to the already tense situation, North Korea detained a U.S. citizen on Saturday as he attempted to leave the country. The arrest will be a topic of discussion when Trump hold a top level briefing with Senators on April 26.

As a reminder, Trump sent a carrier group for exercises in waters off the Korean peninsula as a warning, amid growing fears North Korea could conduct another nuclear test in defiance of United Nations sanctions.

Angered by the approach of the USS Carl Vinson carrier group, a defiant North Korea said on Monday the deployment was “an extremely dangerous act by those who plan a nuclear war to invade”. “The United States should not run amok and should consider carefully any catastrophic consequence from its foolish military provocative act,” Rodong Sinmun, the official newspaper of the North’s ruling Workers’ Party, said in a commentary on Monday.

“What’s only laid for aggressors is dead bodies,” the newspaper said.

Two Japanese destroyers have joined the carrier group for exercises in the western Pacific, and South Korea said on Monday it was also in talks about holding joint naval exercises.

The risk of a Eurozone breakdown now appears to be taken off the table after a French election that has led to a dramatic repricing in European risk assets. And yet the outcome – which was largely expected – has prompted Bloomberg’s Richard Bresow to muse just how much was truly priced in:

“I guess it shouldn’t come as a huge surprise. It truly unnerved the commentariat that the unpredictable seemed to be unpredictable. The second vote is apparently now knowable with certainty. Europe is saved. Populism is about to be vanquished. A strong euro is a good thing for the economy. And ECB President Draghi can begin normalizing rates. Presto chango. Not bad for a result that was everybody’s base case.”

And yet, as Breslow adds, the wholesale reaction leaves something to be desired:

Gold is interesting. I’d have expected it to leak more than it did. It may require Treasury yields to push higher. As we speak, they left a nasty gap and sit right where the bulls were hoping they wouldn’t have to see anytime soon. This may be the most interesting asset of all.

Equities are happy. Think of all that hard-earned wealth creation. And they get to ignore the Shanghai meltdown and potential U.S. government shutdown. Make tax cuts, not war. Another one-half percent higher in the E-mini and dreams of new all-time highs will be dancing in traders’ heads.

For now, however, it is “springtime in Paris”, and all other concerns can be put on the backburner, if only for the next few days.

The full note from Richard Breslow, a former FX trader and fund manager who writes for Bloomberg

* * *

It’s Morning Time for Springtime in Paris

And they get to ignore the Shanghai meltdown and potential U.S. government shutdown. Make tax cuts, not war. Another one-half percent higher in the E-mini and dreams of new all-time highs will be dancing in traders’ heads.

It’s Morning Time for Springtime in Paris

The pollsters won the first round of the French presidential election. In other news, Emmanuel Macron and Marine Le Pen have advanced to the next phase. There were times last night when there seemed to be as much relief from the forecasts being accurate as the diminished likelihood that one of the extremists will win the ultimate prize. Despite the far-right representative coming second and ahead of either of the main party candidates.

I guess it shouldn’t come as a huge surprise. It truly unnerved the commentariat that the unpredictable seemed to be unpredictable. The second vote is apparently now knowable with certainty. Europe is saved. Populism is about to be vanquished. A strong euro is a good thing for the economy. And ECB President Draghi can begin normalizing rates. Presto chango. Not bad for a result that was everybody’s base case.

Some of the other big winners include SNB President Thomas Jordan as EUR/CHF made a new high on the year. This is a good one to keep an eye on as 1.0850, where it peaked, is where heavy technical resistance begins. If the “everything is right with the world” meme is to hold, the cross needs to show it. Game theory would suggest it wouldn’t be a bad time for him to give it a little nudge.

The BOJ has to be feeling a bit better. And will feel a whole lot more sanguine if EUR/JPY can stick above the really pivotal 120 level. It was just last Monday that 115 was under threat. The U.S. can’t really fault the Japanese for this yen weakness, as they will be referred to the French ministry.

Gold is interesting. I’d have expected it to leak more than it did. It may require Treasury yields to push higher. As we speak, they left a nasty gap and sit right where the bulls were hoping they wouldn’t have to see anytime soon. This may be the most interesting asset of all.

Equities are happy. Think of all that hard-earned wealth creation. And they get to ignore the Shanghai meltdown and potential U.S. government shutdown. Make tax cuts, not war. Another one-half percent higher in the E-mini and dreams of new all-time highs will be dancing in traders’ heads.

[Dept. of State] Secretary Tillerson phoned Ukrainian President Petro Poroshenko today to discuss his recent trip to Moscow and his message to the Russian leadership that, although the United States is interested in improving relations with Russia, Russia’s actions in eastern Ukraine remain an obstacle. The Secretary emphasized the importance of Ukraine’s continued progress on reform and combating corruption.

The Secretary accepted condolences from President Poroshenko on the death today of a U.S. member of the Organization for Security and Cooperation in Europe (OSCE) Special Monitoring Mission (SMM). The leaders agreed that the OSCE SMM has played a vital role in its role of monitoring the Minsk agreements designed to bring peace to eastern Ukraine, and that this tragic incident makes clear the need for all sides- and particularly the Russian-led separatist forces-to implement their commitments under the Minsk Agreements immediately.

Secretary Tillerson reiterated the United States’ firm commitment to Ukraine’s sovereignty and territorial integrity and confirmed that sanctions will remain in place until Russia returns control of the Crimean peninsula to Ukraine and fully implements its commitments in the Minsk agreements. (link)

Re-Posted Apr 23, 2017 by Martin Armstrong

Our computer had correctly projected that Le Pen would defeat the mainstream party Socialists. Indeed, Hollende did not even run he was so unpopular. The result of this election is really now a wildcard. For the most important aspect worth underlining in BOLD is the striking fact that this is the first time in modern French history all the mainstream centre-right or centre-left parties of government that have ruled France since the World War II will not make it to stand for the second round of a presidential election.

We can now safely count that Le Pen’s base is very solid. Those who support her will be out in sheer force to take their country back – FRANCE FIRST as they are saying. The wildcard is now Macron, who just started his party last August. All the mainstream media and mainstream politicians will be throwing their support now to Macron. Mainstream press is already estimating Macron took 24% of the vote, with Le Pen close behind with 21.8%. The question is clear that his base is nowhere near as firm as that of Le Pen.

Macron is the mirror image of Trump. Just a bureaucrat, but his wife is 24 years older than him compared to Trump who is 25 years older than his wife. Macron lacks any real experience to speak of outside of government and the joke is that since men mature slower than women, he is just a boy toy who is not ready for prime time who needs his hand held when crossing streets. The two studies bantered about are curious indeed. If a man marries and older woman, she dies sooner whereas a man who marries a younger woman increases his life expectancy by at least 11%. Guess the younger girl keeps him in better shape whereas the boy toy wears out his spouse so they say. Well we have had just about every other scenario arise in politics. Guess its time to change up.

Macron’s platform is typical for a bureaucrat – something for everybody. He claims he wants to cut costs and bureaucracy to boost hiring, while promoting investment in what he called the economy of the future. These are nice vague objectives for which has has come under fire. He then came up with six main priorities: education, work, economic modernization, security, democratic renewal and international engagement.

Mean while, the ECB has firmed up plans to help bailout French banks in the middle of pending uncertainty. May is looking more and more interesting. A Le Pen victory will actually provide a soft-landing for the EU and force it to begin to look at what it is doing so terribly wrong. A Macron victory will doom the EU to a complete collapse and a hard landing in 2018. Why? Brussels will wipe their brow and cheer the end of “populism” and that means they will continue down the same road without any reform. BREXIT should have sparked some internal review. Instead, they just blame the Brits and move on.

After months of anticipatory build up, voting is underway in France on Sunday in the first round of a bitterly fought presidential election that is seen as crucial to the future of the Eurozone, and a closely-watched test of voters’ anger with the political establishment.

Local polling stations opened at 0600 GMT and will close at 1800 GMT, with about 47 million voters expected to cast their ballots in around 67,000 polling stations amid a high terror alert.

Voters, on edge after Thursday’s latest ISIS terrorist attack, will be monitored by more than 50,000 police officers backed by elite units of the French security services patrolled the streets less than three days after a suspected Islamist gunman shot dead a policeman and wounded two others on the central Champs Elysees avenue.

Related Video

Candidates vote in French election

By noon (6.00 a.m. ET), turnout amid perfect weather conditions across much of France was 28.54%, according to official figures, roughly the same as in the 2012 first round, in which almost 80% eventually took part.

Some polls had been predicting a much lower turnout, closer to the 70% that took the then National Front leader Jean-Marie Le Pen into the second round in 2002. Pollsters are unclear about what a low or high turnout could mean in 2017.

While we have previewed today‘s event extensively (most recently here), Reuters summarized it best: today “voters will decide whether to back a pro-EU centrist newcomer [and a former Rothschild banker], a scandal-ridden veteran conservative who wants to slash public spending, a far-left eurosceptic admirer of Fidel Castro or to appoint France’s first woman president who would shut borders and ditch the euro.”

The outcome of today’s election will show whether the populist tide that led to Brexit and Donald Trump’s victory is still rising, or starting to ebb.

The biggest wildcard ahead of today’s outcome is the high level of indecision among the population, with nearly a third of potential voters undecided until the last minute. Hanan Fanidi, a 33-year-old financial project manager, was still unsure as she arrived at a polling station in Paris’ 18th arrondissement.

“I don’t believe in anyone, actually. I haven’t arrived at a candidate in particular who could advance things. I’m very, very pessimistic,” she said.

Looking at the outcome of today’s vote, while the possibility of a Le Pen-Melenchon run-off is not the most likely scenario, it is the one which alarms bankers and investors.

Putting the performance of Marin Le Pen – as well as that of her father Jean-Marie – in election context:

Jean-Marie Le Pen, 2002: 16.8%

Jean-Marie Le Pen, 2007: 10.4%

Marine Le Pen, 2012: 17.9%

Le Pen has told supporters “the EU will die”, while Macron, 39, a former Rothschild banker wants to further beef up the euro zone. Le Pen further wants to return to the Franc, re-denominate the country’s debt stock, tax imports and reject international treaties. Melenchon also wants to radically overhaul the European Union and hold a referendum on whether to leave the bloc.

Le Pen or Melenchon would struggle, in parliamentary elections in June, to win a majority to carry out such radical moves, but their growing popularity also worries France’s EU partners.

Germany’s position on today’s election is hardly a surprise: “It is no secret that we will not be cheering madly should Sunday’s result produce a second round between Le Pen and Melenchon,” German Finance Minister Wolfgang Schaeuble said. If either Macron or Fillon were victorious, each would face challenges. For Macron, a big question would be whether he could win a majority in parliament in June. Fillon, though likely to struggle less to get a majority, would likely be dogged by an embezzlement scandal, in which he denies wrongdoing.

Meanwhile, polls opened on Saturday in France’s overseas territories, allowing citizens to cast their ballots a day ahead of voters on the French mainland. According to unconfirmed twitter reports, based on preliminary offshore results, support for Melenchon is far greater than for any of his competitors.

Re-Posted Apr 23, 2017 by Martin Armstrong

QUESTION: Hi Martin:

I’d love to believe that the collapse of this dead-end ideology is imminent, but when one looks at just the media situation in the entire Western world, and sets aside the political landscape, it is hard to fathom. With O’Reilly’s departure from FOX, and Murdoch’s sons taking over (who are both reportedly very progressive liberals), it seems that Socialism is on the grow. Care to comment and enlighten us some more? It would be vastly appreciated, thanks.

DA

ANSWER: The economics of the situation is what rules. That is why Communism failed. But keep in mind that this is the civil unrest. Socialism will not simply die and move into the light. It will rage, kick, scream, and try to take down everyone in the process. You can see it in these anti-Trump demonstrations. They claim to be for peace and against Trump because he is some sort of racist etc. etc etc. etc…..

Yet these are historically ALWAYS the most violent people. This is the subject of the next 2017 Cycle of War Report. The system is collapsing and all the taxes and fines the dream up in their minds cannot save the system. It will go bust. That is the end of Socialism the same as it was the end for Communism. Both are against human nature.

They say it is wrong to discriminate for race, religion, sex, or sexual orientation. But it’s OK to discriminate against anyone who disagrees with those in power or if they have material wealth above average. This type of discrimination is perfectly fine because it suits their agenda. What happens when the productive class refuses to produce? When Atlas Shrugged, it all comes crashing down.

Do you know that when Ayn Rand published that book, she received the worst reviews ever. The press was socialistic agreeing with FDR. Despite having the press trying to prevent people from reading it fearing the book would be against their socialistic philosophy, Atlas Shrugged has been ranked as #2 in the most influential books just behind the Bible ever written.

The media is downplaying, and in most cases ignoring, the extreme nature of the crisis currently going on in socialist Venezuela under the Maduro regime. Most of the cries for help are from people begging the international media to cover their plight.

Some of the video and photography are stunning as millions of people take to the streets to protest a collapsing economy and food shortages while being met with tanks, guns and rogue militias hired by the government.

Some of the targeted citizens appear chosen at random. Some of the citizens are also desperate and fighting back. Warning – These images are graphic and the video feeds are also alarming. However, the media are barely reporting on any of this, and unfortunately, it looks like things are getting worse:

Even absent guns (anti-gun laws) people are driving back the military.

Yesterday I was phoned to be asked onto the BBC Radio 4 Today program this morning. They said they wanted me to answer questions about how the election would change the UK’s ability to negotiate a new, good relationship with the EU. I was happy to do so, and said I could make any time at their studio. It seemed like a good topic, and central to what the PM said about her reason for calling the election.

They then proceeded to ask me a series of questions all designed to get me to disagree with the UK negotiating position and Prime Minister. I explained that I supported the PM, agreed with her Brexit White Paper and stated aims, and suggested if all they wanted to do was to criticize her, they should approach the opposition parties. They continued to try to get me to disagree. They did not seem to have read the White Paper or the PM’s speech on the topic, so I had to tell them what was in them and why I agreed with them.

I explained again that their thesis that the leave supporting MPs were in disagreement with the PM and were “rebels” was simply untrue. We are not in disagreement with the PM and we have been strongly supporting the government’s statements and legislation on Brexit. She said she would get back to me about the invitation to go on, with the details.

She did not of course bother to, as it was clear I was unwilling to feed their view of what the news should be.

I then found that another Leave supporting Conservative MP had been given the same treatment, and he too had thought the BBC were trying to change the news rather than report the position. When I came to do a live interview on some other BBC program, I was faced with the same stupid thesis and had to explain on air how wrong their idea was.

I do not know who is feeding the BBC this nonsense, but it is frustrating that they do not accept the truth from those whose views they claim to be reporting, and do not bother to get back and openly say they do not want you on because you won’t say what they want you to say.

Re-Posted Apr 20, 2017 by Martin Armstrong

Reuters is reporting that a lawsuit was just filed on Tuesday in federal court in Chicago seeking an injunction to stop Bose’s “wholesale disregard” for the privacy of customers who download its free Bose Connect app from Apple Inc or Google Play stores to their smartphones. The lawsuit alleges that Bose Corp spies on its wireless headphone customers by using an app that tracks the music, podcasts and other audio they listen to and then sells that information thereby violating their privacy rights. Many serviced offices force you to go through their network and they too are tracking what you search so they too can resell that info to others.

The real question is coming to a head. You do you value? Your customer or the few extra pennies you can get buy selling what they look at or sell.